Excerpt taken from: http://www.huffingtonpost.ca
Canadian monetary regulators have issued a uncommon investor alert warning in regards to the dangers of shopping for inventory in firms who wish to soar into the medical marijuana sector.
The CSA issued an announcement Monday “urging investors to be cautious when considering investing in medical marijuana stocks.”
Only one in all Canada’s 20 government-approved licensed producers is publicly traded, however many junior mining firms and shell firms have seen their shares climb after the mere point out of an curiosity within the sector. Some penny shares have seen their shares double and even quadruple after saying their intentions within the area.
Interest within the budding business has been heating up since April 1, when Health Canada turned the sale of medical marijuana over to a handful of economic producers. The business is predicted to be price some $1.3 billion over the subsequent decade.
There are greater than 600 candidates ready within the wings to change into licensed producers, however the authorities not too long ago launched an evaluation of the business utilizing an estimate of 50 firms over the subsequent decade, which might be a sign that it plans to cap the variety of licences it plans handy out.
“In many of these cases, just the announcement of intent to develop a medical marijuana business has resulted in an immediate rise in a company’s stock price. The CSA is concerned investors may face financial harm by purchasing such shares at an inflated price before there is a viable business.”
It warned that firms can solely enter the enterprise with a authorities licence, which requires a major time and price funding.
“If a company is discussing or publicizing its intention to enter the medical marijuana industry, investors should understand what resources it has committed to its plan, as well as the related risks, cost implications and time required before it can begin licenced operations,” it stated within the launch.
“There is no assurance that a company announcing its intent to enter the medical marijuana industry will be successful in obtaining a licence, or in creating shareholder value.”